JPY: The 'fall guy' among major currencies; we stay short - SocGen

From Societe General

Markets are chasing their tail even more than usual at the moment. That mostly reflects what"s going on in treasuries, where 10s are back up at 1.8% this morning after a bearish day that lacked a clear reason to be so. Mixed data, a reasonable 5-year auction and more headlines from a poll in Florida that gave a bit of hope to Trump supporters don"t look like convincing reasons for a bearish move and a fairer interpretation is that the last fortnight, since the September payroll data, has seen a 1.72-1.81 range with a 1.76 average and until we stop meandering around in that range, it"s not worth over-thinking anything. 

Very slowly rising US rates, low volatility and over-correlated markets are a recipe for yield-hunters to stick to their guns even in the face of small setbacks, and for the yen to be the fall guy among major currencies.

So the higher US yields have USD/JPY trending up again. For a bigger move, we need to get a bigger move in relative real yields however -so far, they"ve lagged the nominal move. That will come, but needs US yields to keep going. 

SocGen maintains a long USD/JPY position from 100.30.

For bank trade ideas, check out eFX Plus.

JPY: The "fall guy" among major currencies; we stay short - SocGen
JPY: The "fall guy" among major currencies; we stay short - SocGen
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